Rocket Pharmaceuticals, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Amounts are in U.S. dollars; financial statement amounts are in millions unless otherwise noted. Rocket is a clinical-stage gene-therapy company and reported no revenue.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / prior period |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $30.8 million | $28.3 million |
| General and administrative expense | $11.8 million | $10.9 million |
| Total operating expenses | $42.6 million | $39.2 million |
| Net loss | $43.0 million | $40.2 million |
| Net loss per share, basic and diluted | $0.67 | $0.65 |
| Cash used in operating activities | $39.2 million | $24.3 million |
| Cash, cash equivalents and investments at March 31 | $346.6 million | $388.7 million at December 31, 2021 |
Cash and cash equivalents were $130.6 million, with investments of $216.0 million. Cash, cash equivalents and restricted cash fell by $102.1 million during the quarter, including $63.0 million of net investing cash outflow, primarily reflecting investment purchases net of maturities. The company reported $42.5 million of total liabilities, including $20.9 million of finance lease liabilities and $1.6 million of operating lease liabilities; it reported no material off-balance-sheet arrangements. Accumulated deficit was $534.9 million.
There was no gross profit or meaningful operating margin to report because the company had no revenue and remained loss-making.
Changes versus the prior comparable period
- Net loss increased $2.8 million, from $40.2 million to $43.0 million. Operating expenses rose $3.3 million.
- R&D expense increased $2.5 million, primarily due to higher laboratory supplies, compensation and benefits, and manufacturing and development costs; lower stock-based compensation partly offset the increase.
- G&A expense increased $0.9 million, including higher commercial-preparation spending, partly offset by lower stock-based compensation.
- Operating cash use increased $14.9 million. Management attributed the prior-period comparison in part to a $7.0 million increase in payables in Q1 2021, versus a decrease in payables and accrued expenses and higher prepaid expenses in Q1 2022.
- Interest expense declined to $0.5 million from $1.7 million, mainly because convertible notes had been redeemed or converted in 2021.
Business, outlook and material developments
- Key programs include RP-L102 for Fanconi anemia, RP-L201 for LAD-I, RP-L301 for pyruvate kinase deficiency, and RP-A501 for Danon disease. The FA and LAD-I programs were described as being in potentially registration-enabling studies.
- Management reported encouraging preliminary clinical findings: RP-L102 showed evidence of engraftment in some patients; RP-L201 patients in the described interim dataset demonstrated CD18 expression above the stated survival-associated threshold; and two RP-L301 patients had improved hemoglobin and became transfusion-independent. These are company-reported interim results, not evidence of regulatory approval.
- For RP-A501, the company reported clinical activity in the low-dose cohort. A high-dose patient with advanced heart failure experienced a serious complement-related thrombotic microangiopathy event, required a heart transplant five months after treatment, and had previously required temporary hemodialysis. The FDA had placed the study on clinical hold in May 2021 and lifted the hold in August 2021 after protocol changes. The company said it would focus on the low dose and no longer administer doses of 1.1e14 vg/kg or higher.
- In December 2021, Rocket stopped sponsoring clinical evaluation of RP-L401 and returned the program to academic innovators, reallocating resources to its other programs.
- Management expects R&D expenses to increase as programs advance and manufacturing and clinical-development work continues. The company estimates that cash, cash equivalents and investments, together with the April 2022 ATM proceeds and other efficiencies, should fund operating expenses and capital expenditures into the first half of 2024. This is management’s estimate, not a guarantee.
- Rocket established a Cowen at-the-market offering facility of up to $200 million. No shares were sold under it by March 31; in April, it sold 1.3 million shares for $17.3 million net proceeds after commissions.
- Principal risks include clinical and regulatory uncertainty, manufacturing and supply challenges, intellectual-property protection, competition, and the need for additional financing. The filing said there were no material changes to risk factors disclosed in the 2021 Form 10-K. Disclosure controls were assessed as effective at the reasonable-assurance level.
Important facts for investors to verify
- Whether clinical-trial progress, patient enrollment, follow-up and efficacy results support the company’s development timelines, and whether interim findings are confirmed in larger or longer-term datasets.
- RP-A501 safety monitoring and the effectiveness of protocol changes addressing complement activation and TMA risk, including experience in pediatric patients.
- Actual quarterly cash burn, investment liquidity and the assumptions underlying management’s runway estimate through the first half of 2024.
- Future share sales under the $200 million ATM facility and resulting dilution; the April sale had already added 1.3 million shares.
- Whether rising R&D and commercial-preparation spending, manufacturing needs and regulatory requirements change expected capital requirements or program timing.